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The Degree of Openness to Intra-Regional Trade - Towards Value-Added Based Openness Measures

This study develops innovative measures of openness towards bilateral trade. The most widely applied openness indices are not able to accurately calculate the degree of trade openness. For example, the intra-regional export ratio which relates the value of exports of an integration area to the gross domestic product, can exceed 100 percent because trade is stated in gross terms, while the gross domestic product is expressed in value-added terms. This implies a negative value of domestic non-tradeables. The actual openness concept corrects the traditional concept by expressing trade in value-added terms instead of gross terms.

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Paper provided by Department of Economics, University of Hohenheim, Germany in its series Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim with number 257/2005.

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Date of creation: 2005
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Handle: RePEc:hoh:hohdip:257
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  1. David Greenaway & Neil Foster & Rod Falvey, 2002. "North-South Trade, Knowledge Spillovers and Growth," European Economy Group Working Papers 15, European Economy Group.
  2. Wacziarg, Romain, 1998. "Measuring the dynamic gains from trade," Policy Research Working Paper Series 2001, The World Bank.
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  4. Chen, Been-Lon, 1999. "Trade Openness and Economic Growth: Evidence in East Asia and Latin America," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 265-295.
  5. Magnus Blomstrom & Linda S. Goldberg, 2001. "Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey," NBER Books, National Bureau of Economic Research, Inc, number blom01-1, July.
  6. Falvey, Rod & Gemmell, Norman, 1999. "Factor endowments, nontradables prices and measures of 'openness'," Journal of Development Economics, Elsevier, vol. 58(1), pages 101-122, February.
  7. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc.
  8. Pritchett, Lant, 1996. "Measuring outward orientation in LDCs: Can it be done?," Journal of Development Economics, Elsevier, vol. 49(2), pages 307-335, May.
  9. Lloyd, P.J. & MacLaren, D., 1998. "Measures of Trade Openness Using CGE Analysis," Department of Economics - Working Papers Series 659, The University of Melbourne.
  10. Måns Söderbom & Francis Teal, 2001. "Trade and human capital as determinants of growth," CSAE Working Paper Series 2001-10, Centre for the Study of African Economies, University of Oxford.
  11. Antonio Spilimbergo & Juan Luis Londoño & Miguel Székely, 1997. "Income Distribution, Factor Endowments, and Trade Openness," Research Department Publications 4088, Inter-American Development Bank, Research Department.
  12. Michael M. Knetter & Matthew J. Slaughter, 2001. "Measuring Product-Market Integration," NBER Chapters, in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 15-46 National Bureau of Economic Research, Inc.
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